I had retired from a financial institution on September 30, 2018. However, my enterprise deducted tax and suggested me tax exemption on gratuity best as much as Rs 10 lakh and deducted full tax on the amount exceeding Rs 10 lakh. The financial institution quoted: “As according to circular No.138 dated 17.06.1974 modification to Income Tax Act, rationalisation and simplification at the assessment of Salaried Taxpayers Finance Act 1974 Section 10(10) (ii) that is exemption of up to Rs 20 lakh could observe handiest where the price is made in accordance with the provisions of Section 4(2) of the payment of gratuity (poga). Where improved payment are furnished to the employees via distinctive feature of Section 4(five) of the Poga, the identical would be blanketed usa10(10)(iii) of the Income Tax Act and exemption is confined to Rs 10 lakh. This view is based on the premise that better terms of gratuity are regarded as gratuity payment underneath the agreement or agreement with the company and not under the charge of Gratuity Act.” However, within the light of the cutting-edge government announcement (following the March 29 circular) it was clarified that the limit has been multiplied and probably will come into effect on the grounds that March 31, 2018. Please, therefore, propose me whether the aforesaid modifications in gratuity restriction exemption is relevant to me, as I had retired effective October 1, 2018. Can I get money back of tax? Can I-T authorities additionally pay me hobby? — Mohan Kokane
Section 10(10)(ii) of I-T Act 1961 applies in which the payment of gratuity is made according with the availability of Section four(2) and four(three) of the Payment of Gratuity Act 1972 (Poga). In case of every other gratuity payment, the equal will be included usa10(10)(iii) of I-T Act 1961. From the recommendation furnished through your business enterprise it’s far understood that you have received a better amount of gratuity as per the separate settlement or contract with the employer and no longer as in keeping with the Gratuity Act. Hence, you will be capable of claim exemption united states of america10(10)(iii) of I-T Act 1961. On eight March 2019, vide notification No sixteen, the ministry of finance has enhanced the profits tax exemption for gratuity received beneath Section 10(10)(iii) of I-T Act 1961 to Rs 20 lakh with regards to the personnel who retire on or after 29 March 2018. You have retired on 30 September 2018; therefore, you will be eligible to say more suitable restrict of Rs 20 lakh as exemption. As your business enterprise has already deducted tax considering a limit of Rs 10 lakh, whilst filing your income tax return for AY 2019-20 you could claim exemption for gratuity received to the extent of Rs 20 lakh united states of america10(10)(iii) and claim tax deducted by your company.